THE CAYMAN ISLANDS CIVIL SERVICE ASSOCIATION (CICSA)CO-OPERATIVE CREDIT UNION LIMITEDNOTES TO FINANCIAL STATEMENTS (continued)July 31, 20212.3 Changes in accounting policies and disclosures (continued)The amendments are intended to provide clarity and help ensure consistent application of the standard. Entities thatpreviously applied the incremental cost approach will see provisions increase to reflect the inclusion of costs relateddirectly to contract activities, whilst entities that previously recognized contract loss provisions using the guidancefrom the former standard, IAS 11 Construction Contracts, will be required to exclude the allocation of indirectoverheads from their provisions. Judgement will be required in determining which costs are “directly related tocontract activities”, but we believe that guidance in IFRS 15 Revenue from Contracts with Customers will berelevant.IAS 1 Presentation of Financial Statements - Amendments to IAS 1 (effective January 1, 2023)The IASB issued amendments to paragraphs 69 to 76 of IAS 1 Presentation of Financial Statements to specify therequirements for classifying liabilities as current or non-current.The amendments clarify:•What is meant by a right to defer settlement•That a right to defer must exist at the end of the reporting period•That classification is unaffected by the likelihood that an entity will exercise its deferral right•That only if an embedded derivative in a convertible liability is itself an equity instrument, would the terms of aliability not impact its classificationIn February 2021, the IASB issued amendments to IAS 1 and IFRS Practice Statement 2 Making Materiality Judgements(the PS), in which it provides guidance and examples to help entities apply materiality judgements to accounting policydisclosures.The amendments aim to help entities provide accounting policy disclosures that are more useful by:Replacing the requirement for entities to disclose their ‘significant’ accounting policies with a requirement to disclosetheir ‘material’ accounting policies and Adding guidance on how entities apply the concept of materiality in makingdecisions about accounting policy disclosures.Replacement of the term ‘significant’ with ‘material’ In the absence of a definition of the term ‘significant’ in IFRS, theIASB decided to replace it with ‘material’ in the context of disclosing accounting policy information. ‘Material’ is adefined term in IFRS and is widely understood by the users of financial statements, according to the IASB. In assessingthe materiality of accounting policy information, entities need to consider both the size of the transactions, other eventsor conditions and the nature of them.- 10 -
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